Amazon wins court fight over $300M EU tax order
On Wednesday, Amazon won its appeal against a $300 million tax bill in a court in the EU. Oscar Williams-Grut discusses what’s next for company after this victory in Europe.
Video Transcript
- Let's head overseas and take a look at how European markets are faring today with Oscar Williams-Grut. Oscar.
OSCAR WILLIAMS-GRUT: Well, Myles, we're having a pretty good day here for the FTS 100 in London. And that is largely due to some better than expected GDP numbers we got this morning. UK GDP shrank by 1.5% in the first quarter. Now, that might sound bad. But first of all, it's slightly better than expected. And, also, put it in perspective, this time last year-- well, the second quarter of 2012, GDP shrank by 20% during lockdown.
So a much smaller slump this time as we return to lockdown as businesses get to grips with it. There are also signs of a quick rebound. Growth was 2.1% in March at the end of the quarter, which was better than the 1.4% that analysts had forecast. Deutsche Bank today is upgrading its forecast for UK GDP growth in 2021 on the back of these numbers. They now expect the economy to expand by 6.7%, so really bullish numbers there.
As I said the FTSE, has been outperforming rivals. It's up by about 0.7% today, which is better than the DAX and CAC 40, which are less than half a percent up.
- Hey, Oscar, I want to drill down and ask you about Amazon in particular. Because they were facing a large tax bill in the EU. And it looks like they've escaped it.
OSCAR WILLIAMS-GRUT: Yeah, a big win for Amazon here. A new ruling passed down by the European Court of Justice this morning, they've overturned an earlier ruling from the European Commission that Amazon had illegally benefited from tax benefits in Luxembourg. Back in 2017, the European Union's competition commissioner had said that Luxembourg gave illegal tax benefits to Amazon, allowing them to shift big chunks of profits for a subsidiary to a holding company without paying tax.
Now, at the time, they told Amazon to pay around 250 million euros in back taxes, just over $300 million. But, today, the European Court of Justice sided with Amazon. It overturned that ruling. It said the Commission did not provide enough proof that there was an undue reduction of the tax burden and said that the European Commission's ruling should be annulled in its entirety, so a really resounding rejection there.
This is another big blow for the European Commission. You remember, last year, they also lost another appeal brought by Apple against a 13 billion euro tax ruling that the European Commission had sought to get in back taxes. Competition commissioner Margarethe Vestager has said we will carefully study the judgment and reflect on possible next steps. She said that they are undeterred in their attempts to pursue tax justice across the European Union. But it's not looking good at the moment.
- All right, Yahoo Finance's Oscar Williams-Grut with the latest on everything happening over in European markets.
